Linked Digital Asset Blockchain for Verified Physical Asset Backing
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Solution Overview
Problem
Existing blockchain systems, such as Bitcoin, lack confidentiality of transactions and are vulnerable to theft due to single signature authorization, while centrally controlled blockchains face issues with unscrupulous issuers misrepresenting digital assets backed by physical assets, leading to loss of investor confidence and economic risks.
Innovation Solution
Implement a blockchain system where digital and inventory tokens are linked, ensuring that the total quantity of digital assets is synchronized with physical assets, with validation rules that require simultaneous creation and alteration of both tokens, making it difficult for issuers to misrepresent the backing assets, and incorporating public inspection to ensure transparency and accountability.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If digital assets are made freely transferable and tradable on blockchain, then liquidity and ease of operation improve, but risk of theft and fraud increases due to single signature authorization
Solution Approach 1:
The patent combines multiple digital signatures (first and second signatures) into a single transaction authorization mechanism. The transaction is only valid when both signatures are present, merging the authorization power of multiple parties to enhance security while maintaining the ease of digital transfer on the blockchain network.
2Ease of manufacture
If digital assets are created without strict validation rules, then ease of manufacture improves, but reliability deteriorates due to misrepresentation of physical asset backing
Solution Approach 1:
The patent implements preliminary validation rules that must be satisfied before a digital asset transaction is created and added to the blockchain. The system pre-establishes the relationship between digital assets and physical assets, requiring validation of this backing before the transaction is finalized, preventing misrepresentation from occurring in the first place.
Solution Approach 2:
The patent incorporates feedback mechanisms where the blockchain network validates each transaction against predefined rules regarding physical asset backing. The system provides immediate feedback by rejecting transactions that do not meet the validation criteria, ensuring that only properly backed digital assets are created and transferred on the network.
3Measurement precision
If blockchain maintains complete transparency of all transactions, then measurement precision and public inspection improve, but loss of information occurs regarding confidentiality of transactions
Solution Approach 1:
The patent applies different quality levels of transparency to different aspects of blockchain transactions. While the existence and validation of transactions are publicly visible for confidence-building, the specific details and sensitive information within transactions can be protected through cryptographic methods, allowing local differentiation between public and private information layers.
Data Source
AI summary
A blockchain includes different digital assets, including digital tradeable tokens and inventory tokens. The blockchain may implement a transaction type that includes both digital tradeable tokens and the inventory tokens. The digital tradeable tokens and inventory tokens may be associated with physical assets that can be uniquely identified and are intended to be fungible with each other. The validation rules of the blockchain may rely upon quantities of the digital tradeable token and inventory tokens satisfying a predetermined relationship.